Retail giants such as Shinsegae E-mart and Homeplus are opening new types of stores to get around regulations.

Owners of small grocery shops are up in arms to drive out the variant forms of business run by the big firms.

Supermarkets and their affiliated chains of smaller stores, E-mart Everyday, Homeplus Express and Lotte Super (known locally as super-supermarkets, or SSMs), are required to close at least two days a month and between midnight and 10 a.m. under a revised retail industry law that took effect in April in a bid to save mom-and-pop stores.

The big retailers are also likely to be unable to open new hypermarkets or supermarkets this year under regulations of local governments.

This has led the companies to open what look like large convenience stores and increase the number of franchised shops that buy merchandise from the supermarket chains.

A Homeplus 365, for instance, operates 24 hours with “two for the price of one” products stacked up in front. The prices are cheaper than that of other convenience stores.

There are currently 34 “Homeplus 365” franchised convenience stores, 22 of which were opened this year. Since convenience stores are only restricted by the distance from other stores of the same brand, they are easier to open.

A Homeplus 365 is smaller than a supermarket, but much larger than an average convenience store. It sells the big retailers’ private-label products and fresh foods, unlike normal convenience stores.

A national trade association of convenience stores claimed that Homeplus 365 was not a convenience store, but a “mini-SSM.”

While owners of mom-and-pop stores near the mini-SSMs criticize the retail giants for circumventing the law, the companies insist that they are merely a legal and inevitable choice for survival.

In a similar vein, the number of franchised shops that buy products from E-mart Everyday almost doubled in the past year to 302.

Lotte Super, which acquired CS Retail in 2011, increased the number of CS Retail’s franchised stores called Harmony Marts from 184 to 217.

These franchised shops can use the large retailers’ names if they purchase over a certain amount of goods from the SSMs each month. Because they are run by individuals and not the SSMs, they are free from the retail industry law. They do not pay franchise fees to the SSMs.

Groups of merchants argue, however, that they are not different from the SSMs because they use the large firms’ logistics channels, IT systems and signboards.

Merchant groups in Incheon and Gwangju are calling for regulations against the SSMs’ increase of franchised shops.

An association of wholesalers in Incheon is preparing to file for business adjustment of E-mart Everyday.

By Kim So-hyun (sophie@heraldcorp.com)